Throwing away an old rule

Fellow peasants, unite! The time has come to overthrow the old order! GRS rule #3 says, “Spend less than you earn.” But why should we continue to do that always? Because of tradition? Because of authority? Because that’s what everyone else claims they are doing? To the guillotine with the old rules, I say. It’s time for revolution!

It’s time to turn the old laws upside down. It’s time to say something better. It’s time to declare a new rule #3:

“Earn more than you spend!”

Was that a huge letdown? Did you expect me to tell you to spend wantonly? Or am I just repeating the same old thing?

Mathematically, I agree it all boils down to creating a surplus. But psychologically, the new syntax makes all the difference. The emphasis is elsewhere. And this change expresses a value statement, a core belief, a declaration of intent.

Different emphasis = different results

What’s the first thing that comes to your mind when you think of personal finance? Spending? Or earning? (Or maybe investing?)

Language has a way of framing the issues, and I think that when we say, “Spend less than you earn,” we think of cost control. Spending is the foremost concept in that sentence, and it frames the issue from that perspective. Consequently, we focus our mind on spending less. And less… and less…

I had this minor epiphany about rule #3 when GRS made a challenge for people to save $250 this month. Many said they would do it, but plenty readers also said, “Too much!” and “I’m already at rock bottom!” Several readers wondered if they couldn’t try to make $250 extra instead of cutting any further. I said, YES!

So I started drafting this article while sitting on a table on a weekend morning, selling DVDs my wife and I made, waiting for customers. It’s not something that we usually do (other people do this for us and we sell wholesale), but here was an opportunity, and we took it. We still have to make an extra $65 to meet the challenge for the month, but we’re well on our way and confident we can make the quota.

Why change things around?

Times change, contexts change, rules need to change as well.

When we come from a place of overindulgence, and wanton waste, and shopping out of boredom, it makes sense to consider spending less. When our attics and garages are brimming with unused possessions, it makes sense to think of spending less. When we take a second mortgage to go shopping for new furniture, it makes sense to say, “Whoa there, that’s a huge waste of money, you’re mortgaging your future, and you gotta spend less.”

However, when we’re dealing with stagnant or shrinking incomes, when we can’t find a decent job after graduation, when we have already cut expenses to the bone, when we are stretched so thin we’re ready to break apart at the seams, when we’re using debt to pay for groceries and utilities and school supplies for our kids, maybe it’s time to consider that “spending less” just isn’t cutting it anymore. And it’s time to change the rules.

There is a lot of poverty, even in rich countries

Yes, most of the readers of this blog live in rich, developed countries. And we often ridicule “first world problems” here. But even in the United States, in 2011, we had more than 46 million people in poverty. Children under 18 were more likely to be in poverty (21.9 percent) than people of ages 18 to 64 (13.7 percent). Median household income declined between 2010 and 2011, and the real income of full-time workers declined 2.5 percent. In spite of some small improvements in health coverage (due mostly to an increase of government plans), 15.7 percent of the population remained without any kind of health insurance.

Other developed countries may have more social protections, but they aren’t without problems: Spain and Greece have 26 percent unemployment, Portugal and Ireland hover around 15 percent, France is almost at 11 percent. Other countries in our current barely-below-8-percent neighborhood are the UK, Belgium and Canada.

So, even in rich countries, with all our highways and airports and traffic lights and escalators, with underground mass transit and high-speed trains, with all our power lines and seaports and computers, with widespread Internet, with an overabundance of energy, with medical advances and technology, with air-conditioned supermarkets and shopping malls, and a thousand channels of TV, there’s still a lot of room for improvement. Now think about the rest of the world! That’s a lot of work that needs doing.

Putting earnings first

“Earn more than you spend” places the emphasis on the earning end of the formula. We want to get rich slowly, not live poor comfortably. And for this we need to make enough money so that our surpluses can actually get us rich.

PF articles of recent years have tended to treat income as a fixed quantity, touting savings as the great challenge ahead. I’d like to make a different call to arms.

When we put earnings first, we task our intelligence and imagination with finding ways to make more money, instead of asking them to figure out 101 ways to squeeze blood from a stone.

Please understand that I don’t equate “making more money” with “spending 14 hours at the cubicle every day of the week and never seeing the kids.” Money is an expression of economic value. If we can manage to increase the value of what we give to the world (products, services, labor), then we can increase our income without excessive toil, and we can find time for family, and friends, and vacation, and all the good things in life. As just one example of this, Jason Fried from 37signals runs his company by emphasizing quality over quantity.

Even with the high level of unemployment that we have today, there are millions of positions vacant in industries that cannot find qualified employees! (The Jason Fried article mentions that too.) There are needs that aren’t being serviced by the market. There are products that have yet to be invented. The world is hungry for good and honest and smart work.

We can all grow rich together

Sometimes we are sabotaged by the illusion that if we seek greater earnings we are taking those earnings away from someone else. This illusion comes from a narrow view of economic activity: there is a limited budget; if we take more from the budget then someone else gets less. If you get a promotion, somebody gets left behind. You dominate your market, another business loses.

But things don’t work that way in the larger picture. The economy is not a zero-sum game. When we work less, and make less, and give less, there is less to go around for everybody else. The more we produce, the better we serve, the more and better there is to go around for everyone as well. Just think about how good roads, street lights and mass transit benefit everyone in a city, not just the people who made money building and installing those things.

People like Bill Gates, Steve Jobs, Larry Page and Sergey Brin beat their business competition in their day, but they didn’t get rich by making humanity poor. They made fortunes, but they also made everyone else richer in the process. Remember the time when you had to travel to special places to find information? Remember digging into libraries and archives in search of basic facts? Remember how people had to buy encyclopedias in monthly installments, which only few could afford? Remember when there was no VoIP and long-distance phone calls cost a fortune?

Nowadays, the collective knowledge of humanity and the ability to reach everyone in seconds are accessible from a little rectangle in your pocket (and as the joke goes, we use that awesome power to look at pictures of cats and argue with strangers). And even if smartphones aren’t universal (yet), people in less developed countries can still read Wikipedia (which I used for unemployment stats in this article) or take free online courses from Stanford.

How can you earn more and make everyone else richer in the process?

In a follow-up to this article I’d like to discuss going from mere “earning” (money) to “creating” (great things?); and switching the view from “spending” (money) to “consuming” (resources). But for now I’ve run out of space, so I’d like to ask…

How does your work add to the world? How can you do better? How could you earn more and help others earn more? (And do you want to? Why, or why not?)

Great article! Our finances improved drastically when we started earning more and, like you said, switching the emphasis of our actions made all the difference.
To answer your questions, I help people find jobs that (hopefully) pay more than their last and it’s something that they want to do (help people). My next business idea is related to what I’ve already done, and the new idea will help people as well. My favorite thing is helping others. Making more money doesn’t hurt either .

So true! Too many people mistakenly believe that it’s impossible to earn more–and then go to herculean lengths so save.

Like you mentioned, Lisa, our family’s finances–and stress level–improved dramatically when we started earning more.

Helping others by using what you know is a great, and extremely low- or no-cost way to start earning more–and helping others is truly a wonderful feeling.

Besides earning more by helping others, another huge, life-changing benefit was a complete change in our worldview: instead of complaining about our jobs/employers/economy/whatever, taking action to earn more is incredibly empowering. I continually see new opportunities. Since I started my consulting business in 2007, I’ve QUADRUPLED my former salary and was able to quit my day job (and, yes, I have health insurance and retirement benefits while being self-employed, and my wife has been able to stay home to be with our kids).

Changing our mindset and behavior completely transformed our lives. There’s no way I’d go back to a “real” job.

Interesting way of looking at it! The “earn more than you spend” attitude has seen me through some employment ups and downs, even if I hadn’t heard those words.

I grew up with “pay yourself first” — I think because my dad read the Wealthy Barber and David Chilton’s approach nicely aligned with the strategies he had learned from his parents. If you couldn’t afford to save for retirement and for “a rainy day”, you couldn’t afford cable, a bigger home, a new car, etc. This mantra isn’t particularly helpful wen you’re unemployed or underemployed though!

Hi Elizabeth. I identify with your dads thinking and have lived it in the past. When I was about 24 I was under-employed and job prospects were not good. Living with 2 other guys on a old farm place to split up expenses, no cable,cell phones,credit cards,car payment,gym membership, etc. making 6-10 bucks an hour anywhare from 30 to 70 hrs a week was cutting to the bone. Gardening, feeding pigs in the summer, and finnishing out a calf or two; plus boarding horses and ponies was a way to get extra income. It was a no brainer that was just reflexive in me. That year I made about 13k taxable and never took any govt. assistance. Grandma would give me 20 bucks sometimes and tell me to sock it away for a rainy day! I took that to heart and still do to this day. My life now is a on call job (railroad) and with the kid and all its not like I can take a second job, but I garden and sell some produce and may start feeding some calves again in the future. I guess its the old midwestern culture of making extra on something thats available wether it be talents or resources.

Great post!! I’m glad to read it spelled out like this. I challenged myself for February to cut $250 which isn’t a stretch but will also be looking for more income streams because I want to quickly get rid of this new mortgage I’m signing up for next week!

I appreciate your sensitivity to the issue of poverty, but I still don’t think that the “just earn more” advice can help the poor. This is a world in which there are only a finite number of jobs that earn more. One article that points to a vacancy of jobs is not going to convince me otherwise.

I was reading an article about the working poor and how many millions and millions of workers make $10 or less an hour. (http://theweek.com/article/index/239499/working-but-still-poor) No matter what all of these people do (extra training, etc) all of them are not going to find jobs that pay that much more. That volume of higher paying jobs doesn’t exist. Plus recent job growth has often been on the lower end of the pay scale.

And now that more and more states are becoming right to work states, manufacturing wages like in the article you linked to are going to go down. What was the pay scale of all these supposed vacant jobs? I read an article about how a new factory opened in the Midwest. They were offering $12 an hour for positions that required specific training. Not surprisingly, they had trouble finding trained people who wanted to work there. But after looking for work for another 6 months? They’ll take it even though it is too low.

And it makes me sad that stating the obvious (the scarcity of higher earning jobs) will probably lead me to labeled complainypants, off topic, and inappropriately political. Perhaps the people that read getrichslowly can earn more, but this advice writ large doesn’t really address the race to the bottom we are presently experiencing.

Agreed with this. Sometimes “just earn more” is even more of a problem than “spend less”! And the idea that we could all become entrepreneurs or freelancers with lucrative side gigs on top of our $10/hr jobs is nice, but I think pretty unrealistic – based on how often small businesses fail, they are risky propositions.

@Jane — Have you read “Pound Foolish” by Helaine Olen? I’m not very far into it, but she makes some interesting arguments about how the personal finance industry is making big money telling people to “spend less” and “earn more” while ignoring social and economic factors affecting their ability to do so. Despite decades of financial advice in the media, the rich continue to get richer and the poor get poorer.

No, I haven’t, Elizabeth. But it sounds interesting. Thanks for the recommendation! I’ll see if my library has it.

I definitely think the “earn more” advice is helpful for a certain sector of people, but I just wish people would acknowledge that systemic urban and rural poverty often makes this impossible for the people who need the pay increase the most.

And I think the problem is that oftentimes the implication is that if you are not earning more you just lack motivation or are doing something wrong. The “Brother, heal thyself” advice only goes so far in a society of unequal resources and finite prosperity.

Maybe it’s a truism and not historically accurate, but I wish we had more CEOs today that realized (like Ford) that they need to pay their workers enough to afford the goods they are producing. At least pay them enough so a full time worker doesn’t have to be on public support.

Interesting book, “Pound Foolish,” but I actually thought that was by far the weakest part of her argument. Personal finance is, by its nature, personal. Individuals can’t change the social and economic climate (or, as she discusses later, the male-female wage gap) by themselves, but they often want to seek to do the best they can with what they have. That the personal finance media to give them the tools they need to do that is not a flaw.

(What IS a flaw, as Olen repeatedly hints at, is when personal finance gurus make their money by recommending products and services that are NOT in the best interest of the consumers. Suze Orman shilling for expensive prepaid debit cards, Dave Ramsey selling his endorsement of investment companies to the highest bidder, that sort of thing.)

It’s a fine balance to strike between saying “The cards are stacked against you, and any money problems you’re facing are not entirely your fault,” and saying “You are not helpless, and there are things you can do to improve your situation.” But for most people, both of those statements are true.

I should add that “All Your Worth,” by Elizabeth Warren and Amelia Tyagi, gets that balance exactly right. It’s one of the best personal finance books I’ve ever seen for people who are struggling.

And apologies for the garbled sentence up there. Hopefully it’s clear what I meant.

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Elizabethsays:

12 February 2013 at 10:48 am

I totally agree on the balance — your comment did make sense

Thanks for the book recommendation! I’ll add it to my list.

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El Nerdosays:

12 February 2013 at 10:59 am

Elizabeth Warren is wonderful and my favorite PF author, and I practice what she preaches. She really gets it; I whole heartedly second the endorsement of “All Your Worth.”

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Msays:

12 February 2013 at 7:30 am

I agree, too. I teach University students in Canada and I’m humbled by what they tell me about their job prospects and overall scant financial literacy. So I’ve tried to open a discussion with them to consider how they can find ways to spend less to optimize resources. Right now most are healthy and can hustle for min wage jobs as necessary. But what they lack are to “tricks” to economize and build self-reliance in this economy.

I disagree with this. I know quite a few folks who qualify as urban poor. Some live in terrible neighborhoods. Most of them never finished high school. They’re all on assistance. But everyone of them has some sort of side hustle going on. Very little of it is legal of course. They’re not all engaging in illegal transactions (i.e. selling drugs or food stamps for 50 cents on the dollar), but in order to keep their food stamps and medicaid, they do not tell the government about the additional income they’re earning through house and office cleaning, babysitting, yardwork, etc.

For sure, there’s low self esteem, addiction, abuse, racism, lack of education, and many other forces of systemic poverty at work. I don’t have the answers and I agree the rich get richer and many more are getting poorer, but I think saying the poor in our country have no opportunity to earn more money is at best an oversimplification and at worst is flat out wrong. No legal opportunity to earn more, perhaps. But the opportunity is there and many (most?) of them – at least the urban poor – take advantage of it. (I’ve had little to no exposure to rural poverty so I really cannot comment on it).

Jane, I don’t presume to offer economic policy advice in a personal finance column, but was merely pointing out that even in rich countries life isn’t easy for everyone, and not everyone makes enough to get rich by saving.

As a humanities-degree person I have a long history of holding low-paying jobs, and my own father grew up poor in a 3rd world country. My wife grew up in rural poverty in the US as well. So I know poverty first-hand and know that just complaining about how bad things are doesn’t help at all.

(Actually, okay, I was once a professional complainer, meaning I had a minor political gig, and got paid for it more than the people whose complaints I represented. The irony!)

I’ve come to believe that the attitude that jobs are “out there,” and they are what they are and we are powerless to do anything about it actually hurts people and perpetuates bad conditions.

Complaining is only the statement of recognition that something is wrong– but whether by engaging in activism or entrepreneurship or acquiring new skills for the job market, our actions are the only thing that counts to make a difference.

Yes, environments are important at the aggregate level, but at the individual level it’s sink or swim. And unfair as it might be to swim in choppy seas, I’d rather swim, and tell the people around me– swim! keep swimming! don’t drown!

And if people want to band together and help each other swim too, or build a boat to tame the seas, that’s great.

I’m not going to be the one to say that all is lost and resistance is futile and get used to drowning.

First off, great article, Nerdo. Though it’s hard for some of us to earn more (I’m in a grad program), it’s definitely psychologically beneficial to also think of ways to earn more.

Jane, and others commenting about the lack of jobs: there aren’t jobs out there for several reasons. Many young people are incentivized and enabled by the government to take on 2 homes worth of debt for a useless degree and no marketable skills that employers want. Student loan bubble go pop soon.

Also, there are so many taxes and regulations involved in hiring someone that it’s often not worth it for the potential employer. Wages are just one of many costs involved in employing someone. Again, why do we tax hiring (payroll taxes)? If you tax something you get less of it.

An employer also takes on a huge amount of legal risk when hiring someone. That person may get hurt on the job. The employer may have to fire them for any legitimate reason, and they can sue you or being racist, prejudiced, etc. The EEOC would love to hear from the employee!

And the money printing by the Fed devalues all of the money we all have. The list goes on.

A penny saved isn’t the same as a penny earned. Saving is simply preserving income, where earning is creating more (see my comment #13).

It may be true that earning more from a job isn’t always easy but doing things outside of that to supplement your income isn’t that difficult. Don’t get me wrong, I’m not eluding to anyone starting a business, or that doing so will make anyone’s problems disappear. But, there are plenty of ways to bring in more money if that is what is desired or needed. The only thing that it takes is drive and a willingness to do so in most cases.

I just love you more with every post El Nerdo – and you make me happy that my biggest donation this year was to Wikipedia.

In my current day job and pretty much every job I’ve had, I (try to) reduce inefficiencies. (I say try because it’s often a struggle in bigger companies.) Apparently that’s a valued skill since I make pretty good coin at it.

I’m more focused on earning more on the investment side nowadays. Highly recommend the book Quantitative Value for anyone who wants to do the same. Also the book Active Value Investing is a good resource.

Well said EN! Frugality is good but when you are spending hours drying ziploc bags, there is a problem. Spending the same amount of time making extra money will take you much further, even if you are just pouring coffee at a diner.

Yup, great post indeed! As I see it, the earning spending emphasis rest at where one is on this earning spending continuum, as pointed out nicely in this article. From reading many 1st person narratives, many seem to have reached a rock bottom before making a turn around, either of spending stop/diet or earning more. I also believe spending less (money) may not equate to living with less. Hmm (rubbing chin), better check on other GRS rules other than spend/earn equation. Perhaps more on increase of productivity, to share and be rich together rather than earning just money, as money is indeed a limited ‘resources’?

The thing is, once you make more money, you still have to know how not to spend it all. If your expenses keep rising with your income, all the income in the world will not help you get ahead. Focusing on earning more is a good strategy for many people, but being content with what you have is a skill needed by everyone.

In my day job, I do a valuable service by helping scientists communicate with each other. It takes a rare combination of skills, so it pays well. I suppose I could earn more money by doing more of the same thing as freelance work on the side, but I neither need to nor want to. Instead, my “side gig” is playing music for people. That’s brought in only a couple hundred dollars so far – which, once you account for all the hours I’ve spent practicing, is much less than minimum wage – but it’s a joy for me, so I don’t care.

Elizabeth and k: I’m a writer/editor for a scientific society flagship magazine. For the most part, I seek out important and interesting research and write about it in a way that’s accessible to a broader scientific audience.

The way we look at it, the amount any person can cut from their budget is finite, but theoretic income potential is infinite. Why focus on the finite potential instead of infinite?

Maybe that sounds overly optimistic, but when you’ve known as many people as we have gotten to know who came from backgrounds of very limited means (does Jamaica in the 90′s count as a third world?) and have done very well for themselves, often without formal secondary education – it makes us realize that a lot is possible.

I like to look at it from an expected value perspective. Gains from budget cuts is summing over a finite (and rather small) number of budget items. Gains from unrealized income potential are summing over a (perhaps infinite) number of possibilities. If the latter sum converges, I like to think there’s a good chance it’s at a value that’s higher than the former.

The story goes that she managed to get included in a trip to the US for a charity sports team, and ditched the team before the flight back to Jamaica. She was a teenager and had only distant relatives in the states. Made it more or less on her own for several years, got a couple of years of community college and worked her way up through sales organizations to earn over $100K today. Very into Oprah and “vision boarding”, but her kids had to go to Jamaica to visit family to believe their mom about where she came from and how lucky they are for everything she gives them.

I would disagree (but anyone that knows me would say that is nothing shocking) a bit. Why do you need to put any emphasis at all? Why do you need to make it one or the other? Why can’t you do BOTH and make more money while at the same time cutting the crap out of your life?

It makes sense, after all. Building wealth requires both a stream of income and an ability to keep that income working for you.

Sure, saving alone is good, but it doesn’t make you any better off. It just means that you are keeping more of what you earn. And earning more on its own is also good, but if you increase your spending commensurate with the extra income, it doesn’t do as much good.

Thanks for a post like this. I naturally tend to think more on the lines of where I can cut. I think most Americans still live pretty inefficient lifestyles (myself included). Most of the time there is a lot to cut. Strangely, when I read your article, I could think of a lot more ways to make $250 than to cut it.

Also, small amounts can make a big difference when combined with a trim budget. I think this post motivated me to actually list a bunch of things in my ‘to sell on ebay’ pile. Thanks for the post! I think you can still do rule number 3 and not have to adjust your spending too much!

‘I think that when we say, “Spend less than you earn,” we think of cost control.’

I disagree. I’m always trying to get the best salary I can without taking a job I can’t stand. Because I’m attracted to people with big brains, most of my friends are programmers and engineers, professions in which I have no interest. So I don’t get jobs via word-of-mouth. I end up with jobs with very high turnover or where they’re hiring a lot of people, so they’re desperate enough to take a chance on an unknown like me. Then I work my way up from there, but another problem is that I like to work in the education field, and they can’t actually afford to pay most people what they’re worth (tax dollars).

So for me, focusing on the spending less lets me feel like I have more control, not less control.

To answer your questions, I’ve recently been a liaison between programmers and users. That job became unreasonable (doing the work of 2.5 people for multiple years with new button-pushing supervisor), so now I work for some of the users. I do negotiate for the best compensation I can and am in a position to walk away when it’s not good enough. I suppose I could try to do this work in the for-profit sector, but I don’t find their programs to be interesting at all. Plus you trade better pay for longer hours and more layoffs–I think you still end up with more money overall, but not as much as it first appears.

When I retire in a year or two, I’ll try some higher-risk things like writing a book.

It is important to think about things from different perspectives so I apreeciate the thoughts. I guess it depends on where you are at with job/career/spending/ etc. . as to which avenue would get you the best return on your time and energy invested. I am honestly at a point where I have little return on focusing on either side more (I have a great job, and am saving over 50%). So I am more in the maintaining mode for both – spending less then I earn and earning more than I spend. My goals at the moment are more in increasing the value of the time outside of these activities (with family,kids, friends, etc. . ), and in personal character and skills improvement.

(Sorry, I meant this as a reply to El Nerdo’s response to me, but it didn’t imbed properly)

Fair enough, but I also think that it is a common trope in the personal finance world to not so subtly imply that if someone is drowning, at a fundamental level it must be their fault. I guess I just balk at that notion because it lacks empathy. We certainly don’t think that about poverty in the Third World; yet in our own backyard we tend to criticize the poor and somehow give a positive attitude this magical ability to produce results.

I certainly see the value in a positive attitude. I really do. But sometimes in life that only gets you so far.

There’s this guy that works at a fast food restaurant near us that we go to often. He has an awesome work ethic and a lovely disposition. We have written management to compliment him. Guess what? Three years later he’s still sweeping the floor. Technically, I guess at some level you could consider this his fault, but I also recognize that it might be harder than we think to earn more.

Anyway, interesting discussion. I appreciate further clarification of your position.

2) People who struggle can’t afford the luxury of a negative attitude (I know this first-hand).

3) While a positive attitude can sometimes only get you so far in life, the same is true of innumerable other things– talent, good looks, an education, social skills, money, intelligence, connections, property, etc. Life doesn’t come with a guarantee of success. However, that doesn’t make those traits unnecessary or undesirable either.

RE: the fast food worker, I have no idea of his situation/context/etc. Maybe he loves what he does and is perfectly happy, maybe he needs some career coaching, maybe he goes to school at night and is waiting to graduate to make his move. Who knows? I’d make no assumptions.

Thanks, El Nerdo. I realize now my last sentence was unclear. I didn’t mean that I expected more of a response from you but rather that I appreciated the clarification you had already given. I certainly didn’t think you were using this common trope of blame; I was just pointing out that it does exist. My apologies for the lack of precision in my tense

Then add in “Grow your career.” As your career grows your earnings grow as well. If you can keep your expenses down by minimizing lifestyle inflation you can increase the spread between your earnings and your spending.

Depending on what stage of life you are in, you may have to emphasize one or the other.

I spent many years in graduate school. My earnings wasn’t going to increase unless I took on a part-time job in addition to my research stipend. Cutting expenses was the only feasible way to save money.

Later, grad school transitioned to a post-doc (career growth). I upped my spending to finally live like an adult, but still kept the spread big (minimize expenses).

The two work in concert, but it’s usually easier to get an immediate financial benefit from cutting expenses. Career growth tends to take time to build up enough momentum to make the jump to the next level.

I’d just like to chime in with there being other circumstances that limit your income temporarily, on your way to a brighter future.

My story is that I’ve been seriously ill and so physically disabled that I literally haven’t been able to work with my body or my mind – for the last 10 years. I get Social Security disability benefits, which I’m unendingly grateful for, especially after making it through the first winter scared half to death that I was going to be evicted and simply die under a bridge somewhere. But waiting to see how much next year’s COLA (cost of living adjustment) will be, when it gets smaller and smaller every year, really isn’t quite in the “increase your earnings” category.

But I am gradually getting well and I believe I will eventually be completely well, and I’m starting to look at ways I can make a little money that will be within my physical limitations. Probably I’ll start with selling stuff I’ve bought on ebay and then didn’t like or couldn’t use, then hopefully graduate to taking some freelance computing jobs, which I do have the experience and education to do, just not the physical and mental energy since my health collapsed. There’s so many freelance opportunities on the internet these days for so many different skills and skill levels, I’m surprised there aren’t more people here doing it and talking about it.

I’m 61 years old right now, and looking forward to having a real life again by the time I’m 70. ha ha, we’ll just see about that!

I had a meeting with my first potential SEO client last week (so far all my work has been referral work through my friend), and it sounds like once we nail down all the details, there will be as much work as I can take. Fingers crossed!

I feel guilty for wanting more money. I complain about not being able to max out my Roth and there are people who can’t put food on the table. Then there are people who make what I do, but accomplish so much more. They already have homes paid for, kids’ college accounts funded, and still have money to spare. How did the secretary who died at 102 have millions in the bank despite never making more than 10¢/hour? And why can’t I?

Preach! I completely agree…I am sick of reading the tired, old, cut down on expenses. I can’t cut much more without going absolutely insane or hungry.

I am motivated, inspired and driven by the prospect of INCREASING my earnings and use that to survive and thrive. And pay off my student loans.

Thank you for adding a fresh perspective to this! I agree that language is powerful and constructs the framework of our reality….mind as well be positive and focus on earning more rather than cutting out!

Great article! It’s interesting because many of the tricks that would work to ‘save’ money only work if you have a little extra to work with such as buying in bulk. But if people can get just that hair of breathing room with extra income then they can start to do those things to make themselves rich.

“We want to get rich slowly, not live poor comfortably.” Wow! Glad somebody said that out loud, because it sure seems from the bulk of discussions across the months that living “poor comfortably” is EXACTLY the mantra. Make my own laundry soap? Throw my trash away at my employers?

To me, the principles behind losing weight and achieving financial peace are much the same. A person can only cut back to 500 calories a day and live on hcg hormones before they have to admit that it’s much healthier to eat a little more and exercise to gain muscle mass (which helps them burn calories even while not exercising). Conversely, a person can only live on $10000 a year before they have to admit that it’s time to make a little more money. And I have personally found that the harder I try to earn more money, and the more willing I am to try anything to get my foot in the door, the more opportunities the universe sends my way. The healthier choices I make, the more I want to make healthy choices. The more I look for ways to earn money, the more ways I find to earn money.

Time, energy, money and risk. We can exchange these for each other usually. Sure you can probably get more money, but at what cost? Everyone’s exchange rate is different, but where you should focus on is the most efficiency in the transfer. Most people will reach a peak efficiency of time->money with a full time job. Any new endeavor will usually take much more time for each dollar earned until the project starts taking off or a lot of risk is involved. For me not wasting my free energy is the most important because I am well rested for work I’m more productive and that means raises. Always do what works for you.

It has to go both ways. If you make $100k and live in a low cost of living area but can’t make ends meet, you can very likely find ways to cut your budget without living like a pauper. There comes a time where always striving to earn more more more is just as wearisome as always looking for ways to cut cut cut.

I love this post. It is great to change your perspective on thing every once in a while to look at things differently. I love the new rule! I am definitely at the point in my life where I am trying to maximize my income!

I had an epiphany related to this when playing resource games like Farmville, or Clash of Clans. When playing those games the successful strategy is to put a big focus on building and upgrading your money generating units as quickly as possible.

A similar strategy has usually worked when playing monopoly. Buying all of the property you land on early in the game – never turning down an opportunity to increase your income is a great way to win.

When you play a game like those and don’t build your base of income generating units/properties the game isn’t very fun at all and it takes a lot longer to progress.

If you played those games focused on saving money and delaying purchases or upgrades it would be less fun, and you’d probably lose (in the case of monopoly)

Funny how in the make believe world of games people find it obvious to focus on earning more, but in the real world we are more afraid of losing what we have.

I think it is smart that people maximize their earning potential especially if they can do it with something they enjoy (writing a blog, teaching kids a skill, you name it) but I think it also encourages people to buy their happiness by working more for more money.

Income in most cases usually isn’t the problem. As people earn more they typically spend more. That is why most PF writters focus on reducing spending. Increasing your income is not 100% within your control. Whereas, reducing your spending is 100% up to you.

I like your idea of creating more and consuming more (local) resources. I look forward to the next “installment” of this and seeing what you propose. Part of my job is writing personal finance article as well, that I hope help people realize that there are plenty of ways to save money and become more financially independent- especially surrounding getting out of debt and avoiding taking out even more loans.

Growing up in a fiscally conservative family has left me wondering how to “cut” my way to prosperity. I have started looking at building multiple income streams. It is probably a bad idea, but I have been looking at taking on a second job while I work full time and finish my graduate degree.

This is an interesting post, I enjoyed reading it, and I’m afraid my comment’s rather off-topic but… since you chose to quote statistics in your article, I just wanted to mention that Wikipedia is *not* a reliable resource. Since anyone can post to it (and yes, I’m aware it’s moderated, but that fact still stands), the person posting could have no knowledge or expertise whatesoever regarding the subject in question. If the Wiki article includes citations for the statistics, then I’d recommend going to the original source and quoting stats from there instead. If it doesn’t, then you have no way of knowing whether they’re totally made up.

Just wanted to throw that out there, in an attempt to dispel a common misconception

Made an income estimate and was shocked to find that I couldn’t save a lot this year if I didn’t make more money or spend less, and I’m in the unusual situation that making more money is a lot more easier for me. Still cutting down on the spending a little Thanks for sharing!

I totally agree with you. There is a point at which cutting cost has done its job. You can’t cut costs forever. Your earnings must grow too. That’s why is personaly invest in dividend growth stocks and that I work hard on my career to go up the ladder and get promotions often!

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